Gentry is also pleased to announce that it has acquired the remaining 50% interest in this well and five offsetting sections of land for the consideration of $2.5 million. Gentry now owns a 100% working interest in this gas pool and offsetting lands subject to a potential 50% conversion by a large U.S. independent.
With the addition of the 10-22 Nisku gas well, the Company's daily production volumes are approximately 2,100 boe per day. Natural gas production is 6.5 mmcf per day while crude oil production is approximately 1,020 bbls per day. The Company is also in the process of tieing in three more wells in the Princess area which, when completed, should add a further 100 boe/d net to the Company's daily production.
Gentry continues to focus on the exploitation of a Pekisko oil pool discovered in July 2002 ten miles to the south of the 10-22 Nisku gas well. Gentry has recently drilled six wells into this pool, resulting in five oil (net 1.45) and one abandoned well (net 0.28). At present, production from this oil pool has reached 725 bbls/d (net 240 bbls/d) with associated gas. The Company plans six more delineation wells prior to year-end to extend the pool limits on a standard 160-acre (1/4 section) oil target spacing. The Company anticipates the pool will be downspaced to 80 acres in 2004 providing further drilling locations and additional production volumes.
During the third quarter, Gentry drilled or participated in 22 wells, (net 10) with one well presently drilling (100% Gentry-owned). This has resulted in a 73% success rate (net 71%) comprised of nine oil wells (net 3.2), six gas wells (net 3.6), one cased well awaiting completion (net 0.25) and six abandoned wells (net 2.8). Princess saw the bulk of the third quarter drilling activity with eleven wells (net 4.8) followed by the Whitecourt area with seven wells (net 2.8).
For the 10-22 Nisku gas well, the Company has negotiated a one-year, 2 mmcf per day firm deliverability contract, which secures the last available firm capacity at the third-party facility. Should additional capacity in the gas plant and gathering system become available, Gentry can increase production rates on the well to take advantage of the temporary processing volumes. However, additional drilling in this pool is expected to increase volumes of deliverable gas, which would further strain existing infrastructure. Thus, during this one-year contact period, the Company will assess the effectiveness of this route and compare to alternative options.
The Company has made significant capital investments throughout the year; the capital expenditure budget, initially set at $12 million and subsequently expanded to $18 million, is now translating into higher production and reserves for the Company.
Looking forward to the fourth quarter, Gentry anticipates drilling 14 wells (net 7) which will be concentrated mainly in the Company's core Princess and Sedalia areas. Gentry anticipates exiting 2003 at a production rate in excess of 2,400 boe per day.
Continued production additions are anticipated in the first quarter of 2004 as recently drilled wells are tied in and compression and de-bottlenecking is completed. Gentry possesses a significant inventory of low to medium risk drilling prospects which will be aggressively exploited throughout 2004.
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